Vermont Department of Labor - UI Reform - 2010

Vermont's 2010 legislative session passed several changes:

• Increased taxable wage base to $13,000 effective January 1, 2011.
• The taxable wage base will increase again January 1, 2012 to $16,000.
• Increased penalties for late reports effective July 1, 2010 such as separation and wage requests; quarterly reports.
• New penalties for misclassification of workers: up to $5,000 per unreported worker, per report.
• Effective July 1st, employers will be required to report all new hires within 10 days of the worker's start date. The start date is the first day services are performed for compensation.

Please contact us at Double Entry Bookkeeping, LLC. for further information.

Wonderful Wedding Day!

Thomas Sheltra of County Plumbing and Heating in Morrisville and Diana Jones of Double Entry Bookkeeping, LLC in Essex Junction Vermont tied the knot on June 12, 2010. They had a beautiful ceremony at Inn Victoria in Chester Vermont.

Health Insurance Credit

New for 2010: Tax Credit Helps Small Employers Provide Health Insurance Coverage

Many small businesses and tax-exempt organizations that provide health insurance coverage to their employees now qualify for a special tax credit, according to the Internal Revenue Service.

Included in the health care reform legislation, the Patient Protection and Affordable Care Act, approved by Congress and signed by President Obama on March 23, the credit is designed to encourage small employers to offer health insurance coverage for the first time or maintain coverage they already have. In general, the credit is available to small employers that pay at least half the cost of single coverage for their employees.

“This credit provides a real boost to eligible small businesses by helping them afford health coverage for their employees,” said IRS Commissioner Doug Shulman. “We urge small businesses and tax-exempt employers to look closely at this important tax break — which is already effective — to see if they qualify.”

The maximum credit is 35 percent of premiums paid in 2010 by eligible small business employers and 25 percent of premiums paid by eligible employers that are tax-exempt organizations. In 2014, this maximum credit increases to 50 percent of premiums paid by eligible small business employers and 35 percent of premiums paid by eligible employers that are tax-exempt organizations.

The credit is specifically targeted to help small businesses and tax-exempt organizations that primarily employ low and moderate income workers. It is generally available to employers that have fewer than 25 full-time equivalent (FTE) employees paying wages averaging less than $50,000 per employee per year. Because the eligibility formula is based in part on the number of FTEs, not the number of employees, many businesses will qualify even if they employ more than 25 individual workers.

The maximum credit goes to smaller employers — those with 10 or fewer FTEs — paying annual average wages of $25,000 or less.

Eligible small businesses can claim the credit as part of the general business credit starting with the 2010 income tax return they file in 2011. For tax-exempt employers, the IRS will provide further information on how to claim the credit.

The IRS will use postcards to reach out to millions of small businesses that may qualify for the credit. The postcards will encourage small business owners to take advantage of the credit if they qualify.

HIRE ACT

On March 18, 2010, the President signed the Hiring Incentives to Restore Employment (HIRE) Act. This new jobs bill is intended to encourage employers to hire the unemployed. The HIRE Act creates two new incentives for hiring and retaining unemployed workers:

1. The employer gets a holiday from paying the business’s share of the OASDI (Social Security) tax on the new employee for the rest of 2010, and

2. The employer gets up to a $1,000 tax credit for keeping the new hire on the payroll for at least one year.

Some additional details about the incentives in the new hiring act include:

The 6.2% payroll tax holiday is immediate and increases your business cash flow. While the business is not required to pay its ½ of the OASDI on the new hire’s wages, it must still pay the Medicare tax on the wages paid to the new employees and all FICA taxes for old employees.

The relief from OASDI matching for the first quarter of 2010 is only available for qualified employee wages paid between March 19 and March 31, 2010. In addition, this relief provision
will only reduce payroll deposits beginning in April, 2010.

To encourage businesses to retain the new hires for at least 52 consecutive weeks, the HIRE Act also provides a credit up to the lesser of $1,000 or 6.2% of the first $16,129.03 of wages paid.
This credit will be claimed on the 2011 return.

There is no minimum weekly number of hours of work required of the new employee.

The maximum payroll tax credit that may be forgiven per employee is $6,622. The business saves 6.2% on both a $40,000 worker and a $90,000 worker. There is no maximum dollar amount of forgiveness per business; if you hire 5 qualified employees, your credit could be over $33,000!

If a worker is eligible for both the HIRE credit and the “Work Opportunity Tax Credit,” the business can choose one benefit or the other for 2010—no double dipping.

There are no HIRE tax breaks if the business hires family members (except spouses).

The business can’t simply replace another employee and qualify for the credit unless the replaced employee separated from employment voluntarily or for cause.

The new qualified employee must sign an affidavit stating “Under penalty of perjury, I certify I have not been employed for more than 40 hours in the 60-day period prior to beginning
employment on ______________, 2010."

I hope you find this information helpful. If you would like more details about these provisions, please call us at your convenience.

QuickBooks Seminars

Master the Fundamentals with our Mastering QuickBooks® Hands-On Training Course
Valuable Seminar on QuickBooks® Financial Software
What Every Business Owner Should Know
Double Entry Bookkeeping, LLC.
137 Iroquois Avenue
Essex Junction, VT 05452
Call 802-878-0990 to register
Cost: $175, including materials

QuickBooks ProAdvisor Certification Exam

Diana J. Jones, Double Entry Bookkeeping, LLC. has passed the QuickBooks 2010 ProAdvisor Certification Exam. This certification demonstrates expert knowledge of QuickBooks.

Diana has several years experience in setting up client QuickBooks files as well as helping her clients improve their accounting systems.

Double Entry Bookkeeping offers hands-on individual and classroom training. Double Entry Bookkeeping, LLC. also offers clients full-charge bookkeeping, payroll and tax preparation services.

First-Time Homebuyer Credit

A taxpayer who is a first-time homebuyer of a principal residence may claim a refundable credit equal to 10 percent of the purchase price of the residence (with a maximum credit of $8,000 ($4,000 for married couples filing separately)). The Worker, Homeownership and Business Assistance Act of 2009, signed into law on November 6, extends the credit for qualified taxpayers purchasing principal residences on or before April 30, 2010. If a taxpayer enters into a binding contract before May 1, 2010, to close on the purchase of a principal residence before July 1, 2010, the new law treats the credit as not expiring until July 1, 2010.
The new law also expands the credit to 'long-time homeowners' who are buying replacement property but at a reduced amount of the credit. Individuals who have owned and used the same residence as their principal residence for any five consecutive year period during the eight year period ending on the date of the purchase of a subsequent principal residence may be eligible for a reduced credit of $6,500 ($3,250 for married couples filing separately).
Congress has also made the credit available to more individuals by increasing the modified adjusted gross income (MAGI) phaseouts for the credit. For purchases made after November 6, 2009, the credit begins to phase out for individuals with MAGI between $125,000 and $145,000, and for married couples filing joint returns with MAGI between $225,000 and $245,000."

Diana J. Jones